SECOND DIVISION

[G.R. No. 97753. August 10, 1992.]

CALTEX (PHILIPPINES), INC. , petitioner, vs. COURT OF APPEALS and

SECURITY BANK AND TRUST COMPANY , respondents.

Bito, Lozada, Ortega & Castillo for petitioners.

Nepomuceno, Hofileña & Guingona for private.

SYLLABUS

1. COMMERCIAL LAW; NEGOTIABLE INSTRUMENTS LAW; REQUIREMENTS FOR

NEGOTIABILITY; CERTIFICATE OF TIME DEPOSIT AS NEGOTIABLE INSTRUMENT; CASE
AT BAR. — Section 1 of Act No. 2031, otherwise known as the Negotiable Instruments Law,
enumerates the requisites for an instrument to become negotiable, viz: "(a) It must be in
writing and signed by the maker or drawer; (b) Must contain an unconditional promise or
order to pay a sum certain in money; (c) Must be payable on demand, or at a fixed or
determinable future time; (d) Must be payable to order or to bearer; and (e) Where the
instrument is addressed to a drawee, he must be named or otherwise indicated therein
with reasonable certainty." The CTDs in question undoubtedly meet the requirements of
the law for negotiability. The parties' bone of contention is with regard to requisite (d) set
forth above. It is noted that Mr. Timoteo P. Tiangco, Security Bank's Branch Manager way
back in 1982, testified in open court that the depositor referred to in the CTDs is no other
than Mr. Angel de la Cruz. . . . Contrary to what respondent court held, the CTDs are
negotiable instruments. The documents provide that the amounts deposited shall be
repayable to the depositor. And who, according to the document, is the depositor? It is the
"bearer." The documents do not say that the depositor is Angel de la Cruz and that the
amounts deposited are repayable specifically to him. Rather, the amounts are to be
repayable to the bearer of the documents or, for that matter, whosoever may be the bearer
at the time of presentment.
2. ID.; ID.; DETERMINATION OF NEGOTIABILITY OR NON-NEGOTIABILITY OF
INSTRUMENT; RULES. — On this score, the accepted rule is that the negotiability or non-
negotiability of an instrument is determined from the writing, that is, from the face of the
instrument itself. In the construction of a bill or note, the intention of the parties is to
control, if it can be legally ascertained. While the writing may be read in the light of
surrounding circumstances in order to more perfectly understand the intent and meaning
of the parties, yet as they have constituted the writing to be the only outward and visible
expression of their meaning, no other words are to be added to it or substituted in its
stead. The duty of the court in such case is to ascertain, not what the parties may have
secretly intended as contradistinguished from what their words express, but what is the
meaning of the words they have used. What the parties meant must be determined by
what they said.
3. ID.; ID.; NEGOTIATION, DEFINED; HOLDER, DEFINED; IN CASE AT BAR, DELIVERY OF
INSTRUMENT CONSTITUTED THE TRANSFEREE A MERE HOLDER FOR VALUE BY REASON
OF HIS LIEN. — Petitioner's insistence that the CTDs were negotiated to it begs the
question. Under the Negotiable Instruments Law, an instrument is negotiated when it is
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 transferred from one person to another in such a manner as to constitute the transferee
the holder thereof, and a holder may be the payee or indorsee of a bill or note, who is in
possession of it, or the bearer thereof, In the present case, however, there was no
negotiation in the sense of a transfer of the legal title to the CTDs in favor of petitioner in
which situation, for obvious reasons, mere delivery of the bearer CTDs would have
sufficed. Here, the delivery thereof only as security for the purchases of Angel de la Cruz
(and we even disregard the fact that the amount involved was not disclosed) could at the
most constitute petitioner only as a holder for value by reason of his lien. Accordingly, a
negotiation for such purpose cannot be effected by mere delivery of the instrument since,
necessarily, the terms thereof and the subsequent disposition of such security, in the event
of non-payment of the principal obligation, must be contractually provided for. The
pertinent law on this point is that where the holder has a lien on the instrument arising from
contract, he is deemed a holder for value to the extent of his lien.
4. ID.; CODE OF COMMERCE; RULES TO BE FOLLOWED IN CASE OF LOST
INSTRUMENT PAYABLE TO BEARER; MERELY PERMISSIVE AND NOT MANDATORY. — A
close scrutiny of the provisions of the Code of Commerce laying down the rules to be
followed in case of lost instruments payable to bearer, which it invokes, will reveal that
said provisions, even assuming their applicability to the CTDs in the case at bar, are merely
permissive and not mandatory. The very first article cited by petitioner speaks for itself:
"Art. 548. The dispossessed owner, no matter for what cause it may be, may apply to the
judge or court of competent jurisdiction, asking that the principal, interest or dividends due
or about to become due, be not paid a third person, as well as in order to prevent the
ownership of the instrument that a duplicate be issued him." The use of the word "may" in
said provision shows that it is not mandatory but discretionary on the part of the
"dispossessed owner" to apply to the judge or court of competent jurisdiction for the
issuance of a duplicate of the lost instrument. Where the provision reads "may," this word
shows that it is not mandatory but discretional. The word "may" is usually permissive, not
mandatory. It is an auxiliary verb indicating liberty, opportunity, permission and possibility.
5. CIVIL LAW; OBLIGATIONS AND CONTRACTS; INTERPRETATION OF OBSCURE
WORDS OR STIPULATIONS IN CONTRACT; SHALL NOT FAVOR THE PARTY WHO CAUSE
THE OBSCURITY; CASE AT BAR. — If it was really the intention of respondent bank to pay
the amount to Angel de la Cruz only, it could have with facility so expressed that fact in
clear and categorical terms in the documents, instead of having the word "BEARER"
stamped on the space provided for the name of the depositor in each CTD. On the
wordings of the documents, therefore, the amounts deposited are repayable to whoever
may be the bearer thereof. Thus, petitioner's aforesaid witness merely declared that Angel
de la Cruz is the depositor "insofar as the bank is concerned," but obviously other parties
not privy to the transaction between them would not be in a position to know that the
depositor is not the bearer stated in the CTDs. Hence, the situation would require any party
dealing with the CTDs to go behind the plain import of what is written thereon to unravel
the agreement of the parties thereto through facts aliunde. This need for resort to extrinsic
evidence is what is sought to be avoided by the Negotiable Instruments Law and calls for
the application of the elementary rule that the interpretation of obscure words or
stipulations in a contract shall not favor the party who caused the obscurity.
6. ID.; ID.; ESTOPPEL; EFFECTS; CASE AT BAR. — Any doubt as to whether the CTDs
were delivered as payment for the fuel products or as a security has been dissipated and
resolved in favor of the latter by petitioner's own authorized and responsible
representative himself. In a letter dated November 26, 1982 addressed to respondent
Security Bank, J. Q. Aranas, Jr., Caltex Credit Manager, wrote: " . . . These certificates of
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 deposit were negotiated to us by Mr. Angel dela Cruz to guarantee his purchases of fuel
products" (Emphasis ours.) This admission is conclusive upon petitioner, its protestations
notwithstanding. Under the doctrine of estoppel, an admission or representation is
rendered conclusive upon the person making it, and cannot be denied or disproved as
against the person relying thereon. A party may not go back on his own acts and
representations to the prejudice of the other party who relied upon them.
7. ID.; ID.; CHARACTER OF TRANSACTION DETERMINED BY INTENTION OF THE
PARTIES. — This disquisition in Integrated Realty Corporation, et al. vs. Philippine National
Bank, et al. is apropos: " . . . Adverting again to the Court's pronouncements in Lopez, supra,
we quote therefrom: 'The character of the transaction between the parties is to be
determined by their intention, regardless of what language was used or what the form of
the transfer was. If it was intended to secure the payment of money, it must be construed
as a pledge; but if there was some other intention, it is not a pledge. However, even though
a transfer, if regarded by itself, appears to have been absolute, its object and character
might still be qualified and explained by contemporaneous writing declaring it to have been
a deposit of the property as collateral security. It has been said that a transfer of property
by the debtor to a creditor, even if sufficient on its face to make an absolute conveyance,
should be treated as a pledge if the debt continues in existence and is not discharged by
the transfer, and that accordingly the use of the terms ordinarily importing conveyance of
absolute ownership will not be given that effect in such a transaction if they are also
commonly used in pledges and mortgages and therefore do not unqualifiedly indicate a
transfer of absolute ownership, in the absence of clear and unambiguous language or
other circumstances excluding an intent to pledge.'"
8. ID.; PLEDGE OF INCORPOREAL RIGHTS; REQUISITES; REQUIREMENT FOR PLEDGE
TO TAKE EFFECT AGAINST THIRD PERSONS; NOT OBSERVED IN CASE AT BAR. — As such
holder of collateral security, he would be a pledgee but the requirements therefor and the
effects thereof, not being provided for by the Negotiable Instruments Law, shall be
governed by the Civil Code provisions on pledge of incorporeal rights, which inceptively
provide: "Art. 2095. Incorporeal rights, evidenced by negotiable instruments, . . . may also
be pledged. The instrument proving the right pledged shall be delivered to the creditor, and
if negotiable, must be indorsed." "Art. 2096. A pledge shall not take effect against third
persons if a description of the thing pledged and the date of the pledge do not appear in a
public instrument." Aside from the fact that the CTDs were only delivered but not indorsed,
the factual findings of respondent court quoted at the start of this opinion show that
petitioner failed to produce any document evidencing any contract of pledge or guarantee
agreement between it and Angel de la Cruz. Consequently, the mere delivery of the CTDs
did not legally vest in petitioner any right effective against and binding upon respondent
bank. The requirement under Article 2096 aforementioned is not a mere rule of adjective
law prescribing the mode whereby proof may be made of the date of a pledge contract,
but a rule of substantive law prescribing a condition without which the execution of a
pledge contract cannot affect third persons adversely.

9. ID.; ASSIGNMENT OF INCORPOREAL RIGHTS; REQUIREMENT FOR ASSIGNMENT TO

TAKE EFFECT AGAINST THIRD PERSONS; OBSERVED IN CASE AT BAR. — The assignment
of the CTDs made by Angel de la Cruz in favor of respondent bank was embodied in a
public instrument. With regard to this other mode of transfer, the Civil Code specifically
declares: "Art. 1625. An assignment of credit, right or action shall produce no effect as
against third persons, unless it appears in a public instrument, or the instrument is
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 recorded in the Registry of Property in case the assignment involves real property."
Respondent bank duly complied with this statutory requirement Contrarily, petitioner,
whether as purchaser, assignee or lienholder of the CTDs, neither proved the amount of its
credit or the extent of its lien nor the execution of any public instrument which could affect
or bind private respondent. Necessarily, therefore, as between petitioner and respondent
bank, the latter has definitely the better right over the CTDs in question.
10. REMEDIAL LAW; EVIDENCE; BURDEN OF PROOF AND PRESUMPTIONS; ESTOPPEL
IN PAIS; EFFECT. — In the law of evidence, whenever a party has, by his own declaration,
act, or omission, intentionally and deliberately led another to believe a particular thing true,
and to act upon such belief, he cannot, in any litigation arising out of such declaration, act,
or omission, be permitted to falsify it.
11. ID.; ID.; ID.; EVIDENCE WILLFULLY SUPPRESSED WOULD BE ADVERSE IF
PRODUCED; CASE AT BAR. — When respondent bank, as defendant in the court below,
moved for a bill of particulars therein praying, among others, that petitioner, as plaintiff, be
required to aver with sufficient definiteness or particularity (a) the due date or dates of
payment of the alleged indebtedness of Angel de la Cruz to plaintiff and (b) whether or not
it issued a receipt showing that the CTDs were delivered to it by De la Cruz as payment of
the latter's alleged indebtedness to it, plaintiff corporation opposed the motion. Had it
produced the receipt prayed for, it could have proved, if such truly was the fact, that the
CTDs were delivered as payment and not as security. Having opposed the motion,
petitioner now labors under the presumption that evidence willfully suppressed would be
adverse if produced.
12. ID.; CIVIL PROCEDURE; APPEALS; ISSUES NOT RAISED IN TRIAL COURT CANNOT
BE RAISED FOR THE FIRST TIME ON APPEAL; CASE AT BAR. — Pre-trial is primarily
intended to make certain that all issues necessary to the disposition of a case are properly
raised. Thus, to obviate the element of surprise, parties are expected to disclose at a pre-
trial conference all issues of law and fact which they intend to raise at the trial, except such
as may involve privileged or impeaching matters. The determination of issues at a pre-trial
conference bars the consideration of other questions on appeal. To accept petitioner's
suggestion that respondent bank's supposed negligence may be considered
encompassed by the issues on its right to preterminate and receive the proceeds of the
CTDs would be tantamount to saying that petitioner could raise on appeal any issue. We
agree with private respondent that the broad ultimate issue of petitioner's entitlement to
the proceeds of the questioned certificates can be premised on a multitude of other legal
reasons and causes of action, of which respondent bank's supposed negligence is only
one. Hence, petitioner's submission, if accepted, would render a pre-trial delimitation of
issues a useless exercise.

DECISION

REGALADO , J : p

This petition for review on certiorari impugns and seeks the reversal of the decision
promulgated by respondent court on March 8, 1991 in CA-G.R. CV No. 23615 1 affirming,
with modifications, the earlier decision of the Regional Trial Court of Manila, Branch XLII, 2
which dismissed the complaint filed therein by herein petitioner against private respondent
bank.
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 The undisputed background of this case, as found by the court a quo and adopted by
respondent court, appears of record:
"1. On various dates, defendant, a commercial banking institution, through its
Sucat Branch issued 280 certificates of time deposit (CTDs) in favor of one Angel
dela Cruz who deposited with herein defendant the aggregate amount of
P1,120,000.00, as follows: (Joint Partial Stipulation of Facts and Statement of
Issues, Original Records, p. 207; Defendant's Exhibits 1 to 280):
CTD CTD
Dates Serial Nos. Quantity Amount
22 Feb. 82 90101 to 90120 20 P80,000
26 Feb. 82 74602 to 74691 90 360,000
2 Mar. 82 74701 to 74740 40 160,000
4 Mar. 82 90127 to 90146 20 80,000
5 Mar. 82 74797 to 94800 4 16,000
5 Mar. 82 89965 to 89986 22 88,000
5 Mar. 82 70147 to 90150 4 16,000
8 Mar. 82 90001 to 90020 20 80,000
9 Mar. 82 90023 to 90050 28 112,000
9 Mar. 82 89991 to 90000 10 40,000
9 Mar. 82 90251 to 90272 22 88,000
—— —————
Total 280 P1,120,000
=== =======

"2. Angel dela Cruz delivered the said certificates of time deposit (CTDs) to
herein plaintiff in connection with his purchase of fuel products from the latter
(Original Record, p. 208).
"3. Sometime in March 1982, Angel dela Cruz informed Mr. Timoteo Tiangco,
the Sucat Branch Manager, that he lost all the certificates of time deposit in
dispute. Mr. Tiangco advised said depositor to execute and submit a notarized
Affidavit of Loss, as required by defendant bank's procedure, if he desired
replacement of said lost CTDs (TSN, February 9, 1987. pp. 48-50). LexLib

"4. On March 18, 1982, Angel dela Cruz executed and delivered to defendant
bank the required Affidavit of Loss (Defendant's Exhibit 281). On the basis of said
affidavit of loss, 280 replacement CTDs were issued in favor of said depositor
(Defendant's Exhibits 282-561).
"5. On March 25, 1982, Angel dela Cruz negotiated and obtained a loan from
defendant bank in the amount of Eight Hundred Seventy Five Thousand Pesos
(P875,000.00). On the same date, said depositor executed a notarized Deed of
Assignment of Time Deposit (Exhibit 562) which stated, among others, that he
(dela Cruz) surrenders to defendant bank `full control of the indicated time
deposits from and after date of the assignment and further authorizes said bank
to pre-terminate, set-off and 'apply the said time deposits to the payment of
whatever amount or amounts may be due' on the loan upon its maturity (TSN,
February 9, 1987, pp. 60-62).

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 "6. Sometime in November, 1982, Mr. Aranas, Credit Manager of plaintiff
Caltex (Phils.) Inc. went to the defendant bank's Sucat branch and presented for
verification the CTDs declared lost by Angel dela Cruz alleging that the same were
delivered to herein plaintiff `as security for purchases made with Caltex
Philippines, Inc.' by said depositor (TSN, February 9, 1987, pp. 54-68).
"7. On November 26, 1982, defendant received a letter (Defendant's Exhibit
563) from herein plaintiff formally informing it of its possession of the CTDs in
question and of its decision to preterminate the same.

"8. On December 8, 1982, plaintiff was requested by herein defendant to

furnish the former 'a copy of the document evidencing the guarantee agreement
with Mr. Angel dela Cruz' as well as 'the details of Mr. Angel dela Cruz' obligations
against which' plaintiff proposed to apply the time deposits (Defendant's Exhibit
564).
"9. No copy of the requested documents was furnished herein defendant.

"10. Accordingly, defendant bank rejected the plaintiff's demand and claim
for payment of the value of the CTDs in a letter dated February 7, 1983
(Defendant's Exhibit 566).
"11. In April 1983, the loan of Angel dela Cruz with the defendant bank
matured and fell due and on August 5, 1983, the latter set-off and applied the time
deposits in question to the payment of the matured loan (TSN, February 9, 1987,
pp. 130-131).

"12. In view of the foregoing, plaintiff filed the instant complaint, praying that
defendant bank be ordered to pay it the aggregate value of the certificates of time
deposit of P1,120,000.00 plus accrued interest and compounded interest therein
at 16% per annum, moral and exemplary damages as well as attorney's fees.
"After trial, the court a quo rendered its decision dismissing the instant complaint."
3

On appeal, as earlier stated, respondent court affirmed the lower court's dismissal of the
complaint, hence this petition wherein petitioner faults respondent court in ruling (1) that
the subject certificates of deposit are non-negotiable despite being clearly negotiable
instruments; (2) that petitioner did not become a holder in due course of the said
certificates of deposit; and (3) in disregarding the pertinent provisions of the Code of
Commerce relating to lost instruments payable to bearer. 4
The instant petition is bereft of merit. cdrep

A sample text of the certificates of time deposit is reproduced below to provide a better
understanding of the issues involved in this recourse.
"SECURITY BANK
AND TRUST COMPANY No. 90101

6778 Ayala Ave., Makati

Metro Manila, Philippines
SUCAT OFFICE P 4.000.00
CERTIFICATE OF DEPOSIT
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 Rate 16%

Date of Maturity FEB 23, 1984 FEB 22 1982, 19___

This is to Certify that BEARER has deposited in this Bank the sum of PESOS:
FOUR SECURITY BANK THOUSAND ONLY. SUCAT OFFICE P4,000 & 00 CTS
Pesos, Philippine Currency, repayable to said depositor 731 days after date, upon
presentation and surrender of this certificate, with interest at the rate of 16% per
cent per annum.

(Sgd. Illegible (Sgd. Illegible)

_______________________ ______________________
AUTHORIZED SIGNATURES" 5

______________
Respondent court ruled that the CTDs in question are non-negotiable instruments,
rationalizing as follows:
" . . . While it may be true that the word `bearer' appears rather boldly in the CTDs
issued, it is important to note that after the word `BEARER' stamped on the space
provided supposedly for the name of the depositor, the words `has deposited' a
certain amount follows. The document further provides that the amount
deposited shall be `repayable to said depositor' on the period indicated. Therefore,
the text of the instrument(s) themselves manifest with clarity that they are
payable, not to whoever purports to be the `bearer' but only to the specified person
indicated therein, the depositor. In effect, the appellee bank acknowledges its
depositor Angel dela Cruz as the person who made the deposit and further
engages itself to pay said depositor the amount indicated thereon at the
stipulated date." 6

We disagree with these findings and conclusions, and hereby hold that the CTDs in
question are negotiable instruments. Section 1 of Act No. 2031, otherwise known as the
Negotiable Instruments Law, enumerates the requisites for an instrument to become
negotiable, viz:
"(a) It must be in writing and signed by the maker or drawer;
(b) Must contain an unconditional promise or order to pay a sum certain in
money;
(c) Must be payable on demand, or at a fixed or determinable future time;
(d) Must be payable to order or to bearer; and

(e) Where the instrument is addressed to a drawee, he must be named or

otherwise indicated therein with reasonable certainty."

The CTDs in question undoubtedly meet the requirements of the law for negotiability. The
parties' bone of contention is with regard to requisite (d) set forth above. It is noted that
Mr. Timoteo P. Tiangco, Security Bank's Branch Manager way back in 1982, testified in
open court that the depositor referred to in the CTDs is no other than Mr. Angel de la Cruz.
Cdpr

xxx xxx xxx

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 "Atty. Calida:
q In other words Mr. Witness, you are saying that per books of the bank, the
depositor referred (sic) in these certificates states that it was Angel dela
Cruz? witness:
a Yes, your Honor, and we have the record to show that Angel dela Cruz was
the one who cause (sic) the amount.
Atty. Calida:
q And no other person or entity or company, Mr. Witness?
witness:

a None, your Honor." 7

xxx xxx xxx
"Atty. Calida:
q Mr. Witness, who is the depositor identified in all of these certificates of
time deposit insofar as the bank is concerned?
witness:
a Angel dela Cruz is the depositor." 8

xxx xxx xxx

On this score, the accepted rule is that the negotiability or non-negotiability of an

instrument is determined from the writing, that is, from the face of the instrument itself. 9
In the construction of a bill or note, the intention of the parties is to control, if it can be
legally ascertained. 1 0 While the writing may be read in the light of surrounding
circumstances in order to more perfectly understand the intent and meaning of the parties,
yet as they have constituted the writing to be the only outward and visible expression of
their meaning, no other words are to be added to it or substituted in its stead. The duty of
the court in such case is to ascertain, not what the parties may have secretly intended as
contradistinguished from what their words express, but what is the meaning of the words
they have used. What the parties meant must be determined by what they said. 1 1
Contrary to what respondent court held, the CTDs are negotiable instruments. The
documents provide that the amounts deposited shall be repayable to the depositor. And
who, according to the document, is the depositor? It is the "bearer." The documents do not
say that the depositor is Angel de la Cruz and that the amounts deposited are repayable
specifically to him. Rather, the amounts are to be repayable to the bearer of the documents
or, for that matter, whosoever may be the bearer at the time of presentment.
If it was really the intention of respondent bank to pay the amount to Angel de la Cruz only,
it could have with facility so expressed that fact in clear and categorical terms in the
documents, instead of having the word "BEARER" stamped on the space provided for the
name of the depositor in each CTD. On the wordings of the documents, therefore, the
amounts deposited are repayable to whoever may be the bearer thereof. Thus, petitioner's
aforesaid witness merely declared that Angel de la Cruz is the depositor "insofar as the
bank is concerned," but obviously other parties not privy to the transaction between them
would not be in a position to know that the depositor is not the bearer stated in the CTDs.
Hence, the situation would require any party dealing with the CTDs to go behind the plain
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 import of what is written thereon to unravel the agreement of the parties thereto through
facts aliunde. This need for resort to extrinsic evidence is what is sought to be avoided by
the Negotiable Instruments Law and calls for the application of the elementary rule that
the interpretation of obscure words or stipulations in a contract shall not favor the party
who caused the obscurity. 1 2
The next query is whether petitioner can rightfully recover on the CTDs. This time, the
answer is in the negative. The records reveal that Angel de la Cruz, whom petitioner chose
not to implead in this suit for reasons of its own, delivered the CTDs amounting to
P1,120,000.00 to petitioner without informing respondent bank thereof at any time.
Unfortunately for petitioner, although the CTDs are bearer instruments, a valid negotiation
thereof for the true purpose and agreement between it and De la Cruz, as ultimately
ascertained, requires both delivery and indorsement. For, although petitioner seeks to
deflect this fact, the CTDs were in reality delivered to it as a security for De la Cruz'
purchases of its fuel products. Any doubt as to whether the CTDs were delivered as
payment for the fuel products or as a security has been dissipated and resolved in favor of
the latter by petitioner's own authorized and responsible representative himself. LexLib

In a letter dated November 26, 1982 addressed to respondent Security Bank, J. Q. Aranas,
Jr., Caltex Credit Manager, wrote: " . . . These certificates of deposit were negotiated to us
by Mr. Angel dela Cruz to guarantee his purchases of fuel products" (Underscoring ours.)
1 3 This admission is conclusive upon petitioner, its protestations notwithstanding. Under
the doctrine of estoppel, an admission or representation is rendered conclusive upon the
person making it, and cannot be denied or disproved as against the person relying thereon.
1 4 A party may not go back on his own acts and representations to the prejudice of the
other party who relied upon them. 1 5 In the law of evidence, whenever a party has, by his
own declaration, act, or omission, intentionally and deliberately led another to believe a
particular thing true, and to act upon such belief, he cannot, in any litigation arising out of
such declaration, act, or omission, be permitted to falsify it. 1 6
If it were true that the CTDs were delivered as payment and not as security, petitioner's
credit manager could have easily said so, instead of using the words "to guarantee" in the
letter aforequoted. Besides, when respondent bank, as defendant in the court below,
moved for a bill of particulars therein 1 7 praying, among others, that petitioner, as plaintiff,
be required to aver with sufficient definiteness or particularity (a) the due date or dates of
payment of the alleged indebtedness of Angel de la Cruz to plaintiff and (b) whether or not
it issued a receipt showing that the CTDs were delivered to it by De la Cruz as payment of
the latter's alleged indebtedness to it, plaintiff corporation opposed the motion. 1 8 Had it
produced the receipt prayed for, it could have proved, if such truly was the fact, that the
CTDs were delivered as payment and not as security. Having opposed the motion,
petitioner now labors under the presumption that evidence willfully suppressed would be
adverse if produced. 1 9
Under the foregoing circumstances, this disquisition in Integrated Realty Corporation, et al.
vs. Philippine National Bank, et al. 2 0 is apropos:
" . . . Adverting again to the Court's pronouncements in Lopez, supra, we quote
therefrom:
'The character of the transaction between the parties is to be
determined by their intention, regardless of what language was used or
what the form of the transfer was. If it was intended to secure the payment
of money, it must be construed as a pledge; but if there was some other
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 intention, it is not a pledge. However, even though a transfer, if regarded by
itself, appears to have been absolute, its object and character might still be
qualified and explained by contemporaneous writing declaring it to have
been a deposit of the property as collateral security. It has been said that a
transfer of property by the debtor to a creditor, even if sufficient on its face
to make an absolute conveyance, should be treated as a pledge if the debt
continues in existence and is not discharged by the transfer, and that
accordingly the use of the terms ordinarily importing conveyance of
absolute ownership will not be given that effect in such a transaction if
they are also commonly used in pledges and mortgages and therefore do
not unqualifiedly indicate a transfer of absolute ownership, in the absence
of clear and unambiguous language or other circumstances excluding an
intent to pledge.'"

Petitioner's insistence that the CTDs were negotiated to it begs the question. Under the
Negotiable Instruments Law, an instrument is negotiated when it is transferred from one
person to another in such a manner as to constitute the transferee the holder thereof, 2 1
and a holder may be the payee or indorsee of a bill or note, who is in possession of it, or
the bearer thereof, 2 2 In the present case, however, there was no negotiation in the sense
of a transfer of the legal title to the CTDs in favor of petitioner in which situation, for
obvious reasons, mere delivery of the bearer CTDs would have sufficed. Here, the delivery
thereof only as security for the purchases of Angel de la Cruz (and we even disregard the
fact that the amount involved was not disclosed) could at the most constitute petitioner
only as a holder for value by reason of his lien. Accordingly, a negotiation for such purpose
cannot be effected by mere delivery of the instrument since, necessarily, the terms thereof
and the subsequent disposition of such security, in the event of non-payment of the
principal obligation, must be contractually provided for.

The pertinent law on this point is that where the holder has a lien on the instrument arising
from contract, he is deemed a holder for value to the extent of his lien. 2 3 As such holder of
collateral security, he would be a pledgee but the requirements therefor and the effects
thereof, not being provided for by the Negotiable Instruments Law, shall be governed by
the Civil Code provisions on pledge of incorporeal rights, 2 4 which inceptively provide:
"Art. 2095. Incorporeal rights, evidenced by negotiable instruments, . . . may
also be pledged. The instrument proving the right pledged shall be delivered to the
creditor, and if negotiable, must be indorsed."
"Art. 2096. A pledge shall not take effect against third persons if a description
of the thing pledged and the date of the pledge do not appear in a public
instrument."

Aside from the fact that the CTDs were only delivered but not indorsed, the factual findings
of respondent court quoted at the start of this opinion show that petitioner failed to
produce any document evidencing any contract of pledge or guarantee agreement
between it and Angel de la Cruz. 2 5 Consequently, the mere delivery of the CTDs did not
legally vest in petitioner any right effective against and binding upon respondent bank. The
requirement under Article 2096 aforementioned is not a mere rule of adjective law
prescribing the mode whereby proof may be made of the date of a pledge contract, but a
rule of substantive law prescribing a condition without which the execution of a pledge
contract cannot affect third persons adversely. 2 6

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 On the other hand, the assignment of the CTDs made by Angel de la Cruz in favor of
respondent bank was embodied in a public instrument. 2 7 With regard to this other mode
of transfer, the Civil Code specifically declares:
"Art. 1625. An assignment of credit, right or action shall produce no effect as
against third persons, unless it appears in a public instrument, or the instrument is
recorded in the Registry of Property in case the assignment involves real
property."

Respondent bank duly complied with this statutory requirement. Contrarily, petitioner,
whether as purchaser, assignee or lienholder of the CTDs, neither proved the amount of its
credit or the extent of its lien nor the execution of any public instrument which could affect
or bind private respondent. Necessarily, therefore, as between petitioner and respondent
bank, the latter has definitely the better right over the CTDs in question. LibLex

Finally, petitioner faults respondent court for refusing to delve into the question of whether
or not private respondent observed the requirements of the law in the case of lost
negotiable instruments and the issuance of replacement certificates therefor, on the
ground that petitioner failed to raise that issue in the lower court. 2 8
On this matter, we uphold respondent court's finding that the aspect of alleged negligence
of private respondent was not included in the stipulation of the parties and in the
statement of issues submitted by them to the trial court. 2 9 The issues agreed upon by
them for resolution in this case are:
"1. Whether or not the CTDs as worded are negotiable instruments.

2. Whether or not defendant could legally apply the amount covered by the
CTDs against the depositor's loan by virtue of the assignment (Annex 'C').

3. Whether or not there was legal compensation or set off involving the
amount covered by the CTDs and the depositor's outstanding account with
defendant, if any.
4. Whether or not plaintiff could compel defendant to preterminate the CTDs
before the maturity date provided therein.

5. Whether or not plaintiff is entitled to the proceeds of the CTDs.

6. Whether or not the parties can recover damages, attorney's fees and
litigation expenses from each other."

As respondent court correctly observed, with appropriate citation of some doctrinal

authorities, the foregoing enumeration does not include the issue of negligence on the part
of respondent bank. An issue raised for the first time on appeal and not raised timely in the
proceedings in the lower court is barred by estoppel. 3 0 Questions raised on appeal must
be within the issues framed by the parties and, consequently, issues not raised in the trial
court cannot be raised for the first time on appeal. 3 1
Pre-trial is primarily intended to make certain that all issues necessary to the disposition
of a case are properly raised. Thus, to obviate the element of surprise, parties are expected
to disclose at a pre-trial conference all issues of law and fact which they intend to raise at
the trial, except such as may involve privileged or impeaching matters. The determination
of issues at a pre-trial conference bars the consideration of other questions on appeal. 3 2
To accept petitioner's suggestion that respondent bank's supposed negligence may be
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 considered encompassed by the issues on its right to preterminate and receive the
proceeds of the CTDs would be tantamount to saying that petitioner could raise on appeal
any issue. We agree with private respondent that the broad ultimate issue of petitioner's
entitlement to the proceeds of the questioned certificates can be premised on a multitude
of other legal reasons and causes of action, of which respondent bank's supposed
negligence is only one. Hence, petitioner's submission, if accepted, would render a pre-trial
delimitation of issues a useless exercise. 3 3
Still, even assuming arguendo that said issue of negligence was raised in the court below,
petitioner still cannot have the odds in its favor. A close scrutiny of the provisions of the
Code of Commerce laying down the rules to be followed in case of lost instruments
payable to bearer, which it invokes, will reveal that said provisions, even assuming their
applicability to the CTDs in the case at bar, are merely permissive and not mandatory. The
very first article cited by petitioner speaks for itself:
"Art. 548. The dispossessed owner, no matter for what cause it may be, may
apply to the judge or court of competent jurisdiction, asking that the principal,
interest or dividends due or about to become due, be not paid a third person, as
well as in order to prevent the ownership of the instrument that a duplicate be
issued him." (Emphases ours.)

xxx xxx xxx

The use of the word "may" in said provision shows that it is not mandatory but
discretionary on the part of the "dispossessed owner" to apply to the judge or court of
competent jurisdiction for the issuance of a duplicate of the lost instrument. Where the
provision reads "may," this word shows that it is not mandatory but discretional. 3 4 The
word "may" is usually permissive, not mandatory. 3 5 It is an auxiliary verb indicating liberty,
opportunity, permission and possibility. 3 6
Moreover, as correctly analyzed by private respondent, 3 7 Articles 548 to 558 of the Code
of Commerce, on which petitioner seeks to anchor respondent bank's supposed
negligence, merely established, on the one hand, a right of recourse in favor of a
dispossessed owner or holder of a bearer instrument so that he may obtain a duplicate of
the same, and, on the other, an option in favor of the party liable thereon who, for some
valid ground, may elect to refuse to issue a replacement of the instrument, Significantly,
none of the provisions cited by petitioner categorically restricts or prohibits the issuance a
duplicate or replacement instrument sans compliance with the procedure outlined therein,
and none establishes a mandatory precedent requirement therefor. LLjur

WHEREFORE, on the modified premises above set forth, the petition is DENIED and the
appealed decision is hereby AFFIRMED.
SO ORDERED.
Narvasa, C . J ., Padilla and Nocon, JJ ., concur.
Footnotes

1. Per Justice Segundino G. Chua, with the concurrence of Justices Santiago M. Kapunan
and Luis L. Victor.
2. Judge Ramon Mabutas, Jr., presiding; Rollo, 64-88.

3. Rollo, 24-26.

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 4. Ibid., 12.
5. Exhibit A, Documentary Evidence for the Plaintiff, 8.

6 Rollo, 28.
7. TSN, February 9, 1987, 46-47.

8. Ibid., id., 152-153.

9. 11 Am. Jur. 2d, Bills and Notes, 79.
10. Ibid., 86.
11. Ibid., 87-88.
12. Art. 1377, Civil Code.

13. Exhibit 563, Documentary Evidence for the Defendant, 442; Original Record, 211.

14. Panay Electric Co., Inc. vs. Court of Appeals, et al., 174 SCRA 500 (1989).
15. Philippine National Bank vs. Intermediate Appellate Court, et al., 189 SCRA 680 (1990).
16. Section 2(a), Rule 131, Rules of Court.
17. Original Record, 152.

18. Ibid., 154.

19. Section 3(e), Rule 131, Rules of Court.
20. 174 SCRA 295 (1989), jointly decided with Overseas Bank of Manila vs. Court of
Appeals, et al., G.R. No. 60907.
21. Sec. 30, Act No. 2031.
22. Sec. 191, id.

23. Sec. 27, id.; see also Art. 2118, Civil Code.

24. Commentaries and Jurisprudence on the Philippine Commercial Laws, T. C. Martin,

1985 Re. v. Ed., Vol. I, 134; Art. 18, Civil Code; Sec. 196, Act No. 2031.

25. Rollo, 25.

26. Tec Bi & Co. vs. Chartered Bank of India, Australia and China, 41 Phil 596 (1916); Ocejo,
Perez & Co. vs. The International Banking Corporation, 37 Phil. 631 (1918); Te Pate vs.
Ingersoll, 43 Phil. 394 (1922).
27. Rollo, 25.

28. Ibid., 15.

29. Joint Partial Stipulation of Facts and Statement of Issues, dated November 27, 1984;
Original Record, 209.

30. Mejorada vs. Municipal Council of Dipolog, 52 SCRA 451 (1973).

31. Sec. 18, Rule 46, Rules of Court; Garcia, et al. vs. Court of Appeals, et al., 102 SCRA 597
(1981); Matienzo vs. Servidad, 107 SCRA 276 (1981); Aguinaldo Industries Corporation,
etc. vs. Commissioner of Internal Revenue, et al., 112 SCRA 136 (1982); Dulos Realty &
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 Development Corporation vs. Court of Appeals, et al., 157 SCRA 425 (1988).
32. Bergado vs. Court of Appeals, et al., 173 SCRA 497 (1989).
33. Rollo, 58.

34. U.S. vs. Sanchez, 13 Phil. 336 (1909); Capati vs. Ocampo, 113 SCRA 794 (1982).

35. Luna vs. Abaya, 86 Phil. 472 (1950).

36. Philippine Law Dictionary, F. B. Moreno, Third Edition, 590.
37. Rollo, 59.

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